W2 Employees vs 1099 Contractors – Why Risk It?

You Get What You Pay For

We have heard it before – hiring 1099 event staff is cheaper. But have you heard the saying, “you get what you pay for”? The risk associated with hiring a 1099 independent contractor is enormous. Not only are you putting your agency at risk, but your client is at risk as well. We’re talking $10,000 – $100,000 of wasted money. Not to mention the headaches of dealing with litigation. Let’s be honest…you’re not going to spend more and hire us just because we are a W2 certified agency. We get that. But you’ll sure be glad you did if/when you get a call from the Department of Labor.

Why you should be concerned

Today, many event staffing agencies are fighting unemployment claims with the Department of Labor – and that’s not cheap either! President of the US Staffing Association and member of the White House Business Forum, Crystal Blackwell shared, “Many firms placing 1099 IC’s are being hit with some hefty fines for misclassification, and the DOL is now going back to their clients and may hit them with charges as well.” Big agencies and holding companies are now requiring their firms to only hire W2 agencies. They do this because they know it’s worth a small increase in cost to save BIG time.

According to Employment Law specialist, Mr. John Sparks, Partner at Austin & Sparks, “The IRS Code provides a safe harbor to employers who misclassify their employees as ‘independent contractors’. However, should the employer fail to prove it acted in good faith, the safe harbor provision offers no protection.” See In re: Arndt, 201 B.R. 853.

25 Years of Experience to help you!

We have a head start on trust. For 25 years, we have served as a leader in the industry, including five years of W2 compliance and protection of our clients. We hired 1099 contractors for 20 years, but in 2012, due to the increasing industry-wide risk of co-employment, stress, and costs required to fight unemployment claims, we decided to provide W2 employees for your events. This change took our agency partners and clients out of an unnecessary position of risk. We were one of the first agencies to do this and we know what it takes to be compliant and ensure you are not at risk.

This is honestly more work for us, but we know it’s important for you and want to keep our clients safe. It means WE are the ones managing unemployment claims, childcare withholding, credit collection withholdings, and more for thousands of people – but that’s YOUR benefit! Plus, this is a greater profit for you. Your cost of staffing increases due to the increased rates and your markup on an increase in staffing expenses generates more income!

Don’t Risk It. We can help.

We know the whole W2 thing may not be on your radar. But if you ask your CFO, it soon will be. Seriously, you are taking risky steps if you are hiring 1099 independent contractors for your promotional events. The stress and costs associated with fighting the co-employment & unemployment claims are expensive and time-consuming. It’s obvious that saving a little cash on the front end can not only cost you more money in the long run but also waste valuable hours of your time.